Professional Documents
Culture Documents
ACKNOWLEDGEMENTS
The preparation of this research report involved the contributions of many individuals over a period of more than six months.
Wed like to thank 2002 ECR Europe Conference Co-Chairs Robert Wilkinson, vice president, Coca-Cola Greater Europe, and
Friso Coppes, vice president, Royal Ahold, and Marco Thyssen of ECR Europe for their support.
We would also like to thank the following retail and consumer products companies for their time, support and valuable insight:
Ahold Supermercados (Spain)
Albert Heijn (Netherlands)
Alcampo, S.A. (Spain)
Aldeasa (Spain)
C&A (Germany)
C1000 (Netherlands)
Carrefour (France)
Carrefour (Spain)
Champion (Spain)
Coca-Cola Espaa (Spain)
Compar S.p.a. - Bata (Italy)
Coop s.c.a.r.l. (Italy)
Coop Norge (Norway)
Danone, S.A. (Spain)
De Bijenkorf (Netherlands)
Dia (Spain)
E. Leclerc (Spain)
El Corte Ingls (Spain)
Enaco (Spain)
Gallina Blanca (Spain)
General Mills Ibrica (Spain)
Grupo Panrico (Spain)
Gruppo Lombardini S.p.a. (Italy)
Hema (Netherlands)
IKEA (France)
Industrie Natuzzi S.p.a. (Italy)
James Dillon Sportswear S.p.a. - JDS (Italy)
Kimberly-Clark (Spain)
Kraft Foods Espaa, S.A. (Spain)
K-rauta (Finland)
Kronenbourg (France)
Lever Faberg (Spain)
Liabel S.p.a. (Italy)
Lindex (Sweden)
Mail Boxes Etc. (Italy)
Marks & Spencer (United Kingdom)
Gratitude is owed to the Cap Gemini Ernst & Young country teams who contributed data, supporting information and insight,
and who spent many hours interviewing consumers and industry executives whose comments add life and perspective to
the quantitative research. Our thanks go to:
Finland: Juha Mustakangas
France: Philippe Jacquier, Anne Gabet, Jean Tassin, Gilles Nouailhetas, Julien Fulachier
Germany: Elina Kuusisto, Kimi Uriu, Martin Bassler, Daniel Haudenschild
Italy: Andrea Mazzucato, Rosanna Sassi, Lorenzo Servadio, Claudia DellOsso
Netherlands: Matty Geertsen, Alice van Eekelen, Gertjan de Ruijter
Norway: Stein Bertinussen
Spain: Jean-Marie Benaroya, Jose Carvajal Martinez, Ignacio Garca de Sola
Sweden: Johan Nordquist, Ulf Nilsson
United Kingdom: Richard Hull, The Co-operative Group
Finally, the project would not have been possible without the efforts and dedication of the Cap Gemini Ernst & Young core
team: Stella Goulet, program sponsor; Roberto Iorio, program sponsor and ECR Europe liaison; Raffaella Poggio, program
manager; Mary Manning, content and analysis coordinator; Nina Groothuijzen, marketing and communications manager; and
Priscilla Donegan, publications editor.
Fred Crawford
Executive Vice President
Global Managing Director
Consumer Products, Retail & Distribution
Cap Gemini Ernst & Young
Price: 50 euros
CONTENTS
Introduction: Through the Consumers Eyes
5
5
6
6
7
7
7
European Overview:
How Consumer Relevancy Plays Out Across Europe
Consumer Relevancy: A European View
Close-up on Consumers
What Consumers Really Want
Data Points to Lack of Differentiation
Net Returns: Online Shopping Remains Low
Where Countries Differ
At a Glance: Consumer Sensitivity to Retail Attributes by Country
8
8
9
9
10
10
11
11
The Countries
Finland: Store Preferences Stand Out
Prisma: Providing Value for the Money
K-rauta: Thriving in the Changing DIY/Hardware Market
12
13
14
15
16
18
20
21
23
23
24
25
26
27
29
30
31
33
34
35
36
38
39
Consumers today are crying out for honesty, respect, dignity, trust, consistency and
fairness, and they will respond to companies that reflect these human values in their
interactions with customers. When consumers were asked to identify the key factors that
they considered to be extremely important in determining their shopping satisfaction,
they consistently pointed to values-oriented factors. In contrast, traditional factors related
to product and service value, such as features and functions, were much less significant.
The most important of the human values that consumers look for from companies is
honesty, followed by respect and reliability.
The Role of Retail Attributes: Price, Product, Service, Access and Experience
A chasm exists today between what consumers are looking for from retailers and what
companies are offering. Bridging this gap requires an understanding of the new language
Research Methodology:
About the Study
The objective of this European study
was to examine the forces driving
shopping behaviour in order to better
understand what consumers are looking for from their retail experiences.
Cap Gemini Ernst & Young worked
with ORC International, the global
research operating unit of Opinion
Research Corporation, to conduct the
research. ORC International surveyed
6,000 consumers in nine European
countries: Finland, France, Germany,
Italy, Netherlands, Norway, Spain,
Sweden and the United Kingdom. The
composition of the consumer sample
in each country was based on projectable national samples representative of the population from the standpoint of region, age and gender.
Regional breakdowns in each country
were aligned with those used by
ACNielsen.
The research model was based on
comparable studies conducted in the
United States. The survey vehicle consisted of a questionnaire comprising
51 statements related to the five basic
attributes of a commercial transaction:
price, product, service, access and
experience. Respondents were asked
to indicate the degree of importance of
each factor to their shopping satisfaction using a numerical scale of 1 to 5
(with 1 being not important and 5
being extremely important).
The survey also measured shopping
frequency for six core channels (supermarkets, discount stores, department
stores, health and beauty stores,
clothing/shoes/accessories stores and
speciality stores) and in France, Spain
and Italy, the hypermarket channel. In
addition, consumers were asked to
identify their favourite stores by channel as well as the primary and secondary reasons for shopping at those
stores. Also included were questions
concerning Internet shopping, cost
perceptions related to the introduction
of the euro and the importance of
values to respondents.
The projects quantitative research was
supported by numerous case studies,
interviews with retail and consumer
product company executives, and
consumer face-to-face interviews in
the nine countries.
5
% saying
extremely
important
71%
69%
67%
64%
60%
% saying
extremely
important
14%
13%
12%
10%
7%
Honesty
55%
Respect
18%
Reliability
11%
Friendly
11%
Courteous/Polite/Kind
9%
% saying
36%
Respect
18%
Reliability
15%
Good Service
9%
Trust
9%
Consumers today are looking for more from their
commercial transactions than simply the product
or service itself. They are looking for values such
as honesty, respect and trust to be reflected in the
context surrounding those transactions.
Consumer Relevancy:
A New Model to Drive Strategy and Growth
Business viability hinges on understanding the new language of consumers.
Two countries separated by a common language. George Bernard Shaw/Winston Churchill (referring to England and the United States)
Experience
Price
Product
Service
If a business
dominates
on this
attribute, it ...
Provides a
solution
Provides
individual
intimacy
Is the pricing
authority
Generates
inspiration for
customers
Provides
customisation
of products and
services
... and
customers
seek the
business
If a business
differentiates
itself on this
attribute, it ...
Provides
convenience
Engenders care
for the customer
Is consistent in
its pricing
Generates
reliability for
customers
Provides
education for
customers
... and
customers
prefer the
business
If a business
operates at
industry par on
this attribute, it ...
Provides
ease
Engenders
respect for the
customer
Is honest in its
pricing
Generates
credibility
with customers
Provides for
accommodation
of customers
needs
... and
customers
accept the
business
Consumer Relevancy is based on a three-level model for each of the five attributes. At the basic threshold level of
competing on access, for example, consumers are saying, Make it easy for me to find what I need, and to get in
and out of your store in a hurry. At the second level, consumers are telling businesses to make the experience
convenient for them. And at the highest level, in which they actively seek a company, consumers are looking for
businesses to provide solutions to their lifestyle problems. How do you apply Consumer Relevancy? First, ask
yourself whether your business is currently operating at industry par in all five of the attribute areas based on the
framework shown here. If the answer is no, you must first lift those attributes to a level that meets the marketplace.
Then its time to consider on which attribute to dominate and on which to differentiate. If you arent sure, ask your
customers. Theyll be happy to tell you.
7
European Overview:
How Consumer Relevancy Plays Out Across Europe
From Finland to Italy, European consumers are searching for honesty, consistency
and fairness in their shopping experiences. And most are hard-pressed to identify
clear points of differentiation among various retailers.
Secondary Attribute
Price
Service
Product
Experience
Access
Price
Intermarch,
Aldeasa
Service
Sephora, Galeries
Lafayette, El Corte
Ingls, Marks &
Spencer (food), FNAC,
Gruppo Lombardini
Statoil
Detaljhandel
Product
Aldi, Lidl,
Deichmann/Roland,
Leader Price,
Prisma, H&M
Superquinn
K-rauta
Albert Heijn
Real, Carrefour,
Coop (Italy),
Casino,
Divani & Divani
Experience
Access
hlns, Hema
European retailers highlighted in red are profiled in case studies throughout the report. Their positioning on this
matrix indicates the primary and secondary attributes on which their management teams have built their strategic
framework. In addition, consumers in the nine European countries studied were asked to identify the primary
and secondary reasons that they shop at their favourite stores across key retail channels. The retailers highlighted
in black were among those that consumers identified as being particularly well differentiated in terms of the
Consumer Relevancy model. (Note: Carrefour, Marks & Spencer and Coop Norge are also featured in case studies,
and Superquinn was profiled in The Myth of Excellence, the best-selling business book that introduces Consumer
Relevancy; for more information, see page 39 of this report.)
% saying
extremely
important
% saying
extremely
important
PRICE
PRICE
54%
57%
38%
3. The retailer offers leading brands at
lower prices
54%
54%
PRODUCT
PRODUCT
1. The retailer provides consistently good
merchandise quality
67%
70%
50%
59%
48%
58%
SERVICE
SERVICE
1. You can unconditionally return merchandise
with which you are unhappy
60%
69%
57%
65%
56%
64%
ACCESS
ACCESS
71%
69%
64%
68%
57%
60%
EXPERIENCE
EXPERIENCE
1. Employees are courteous and respectful
69%
73%
54%
66%
51%
61%
The importance of factors such as honesty, consistency and respect was apparent in consumer responses to
statements regarding their shopping experiences. The results of the European research mirror to a large degree
comparable research conducted among thousands of consumers in the U.S. over the past three years.
I like sales in general, but when they always have sales I start wondering.
If they can afford to have constant sales, why cant they put that money
into lowering their regular price levels. I feel a bit cheated.
10
Yes
17%
16%
83%
84%
No
8%
92%
21%
7%
93%
18%
26%
8%
92%
82%
79%
73%
28%
28%
Europe
Total
23%
22%
Finland
22%
78%
74%
18%
27%
14%
14%
France
Germany
16%
14%
Italy
Netherlands
Norway
Spain
13%
Sweden
UK
The shops should not try to entertain the customer. Its enough that the store is
nice and cosy and that you feel comfortable there.
dK
Un
ite
en
Sw
ed
ain
Sp
wa
lan
No
r
Ne
th
er
y
Ita
l
rm
an
Ge
e
nc
Fr
a
an
d
Fin
l
ATTRIBUTE
ing
ds
do
m
Access
Experience
Price
Product
Service
High Sensitivity
Low Sensitivity
While theres no denying that there was much unanimity among consumers in all nine European countries about
the factors that matter most in the shopping experience, there were differences that emerged as well. For example,
shoppers in France tended not to rate the factors related to service as highly as did consumers in a number of
other countries, while those in Norway and the UK displayed lower sensitivity to factors related to access.
of respondents said they shop in a hypermarket at least once a week, Carrefour led
the list of favourites, followed by Auchan,
Leclerc and Intermarch. In Spain, almost
two-thirds of consumers shop at hypermarkets at least once a week, and again
Carrefour was at the top of the list of
favourites, followed by Hipercor, Alcampo,
Eroski and Mercadona. In Italy, the frequency of shopping is a little lower, with
45 percent of consumers saying they shop
at hypermarkets at least once a week.
Among those named as favourites were
Ipercoop, Auchan and Carrefour.
The results for the department store channel were mixed, with consumers in some
countries identifying clear favourites,
while shoppers in others were less definitive. In the Netherlands, 41 percent of
respondents pointed to V&D as their
favourite department store; in Spain,
El Corte Ingls was named by 39 percent
of consumers; in Finland, 29 percent
named Stockmann; and in France, 20
percent identified Galeries Lafayette.
However, in countries such as Norway
and Italy there were no clear favourites
in the department store channel.
In channels such as clothing/shoes/accessories, health and beauty, and speciality
stores, shopping frequency was generally
fairly low and there were only a handful
of retailers that stood out. As mentioned
previously, Boots was named by 36 percent of consumers in the UK as their
favourite health and beauty store. Next,
a UK clothing chain, was identified as the
favourite store in the clothing/shoes/accessories channel by 11 percent of UK
respondents, the highest of any retailer in
this sector in any of the countries. In the
Netherlands, while shopping frequency
was low for the health and beauty channel
(74 percent of consumers said they shop
less than once a month vs. 43 percent for
Europe overall), respondents did have
strong store preferences, with DA Chemist
and Kruidvat leading the list of favourite
health and beauty stores, followed by
Aholds Etos chain.
While this topline review provides an
overall picture of the European retail business as seen through the eyes of consumers,
the sections that follow offer more indepth analysis of shopping behaviour and
preferences in each of the nine countries.
Also included are case studies of a number
of retailers that provide a view of what
Consumer Relevancy looks like in practice.
11
Respondents in Finland
placed the greatest
emphasis on factors
related to both access
and experience.
% saying
extremely
important
% saying
extremely
important
71%
67%
69%
66%
67%
62%
64%
60%
60%
59%
% saying
extremely
important
14%
13%
% saying
extremely
important
10%
4%
12%
3%
10%
2%
2%
7%
stores were relatively high in Finland, with 7 percent of consumers naming Kesko/Kgroups K-rauta as their favourite and 5 percent citing Kesport/Intersport, also operated
by Kesko/K-group. In most of the European countries, store preference rates in this channel were lower, primarily due to the fact that the speciality channel covers a variety of
sectors, including books, sporting goods, electronics, toys and do-it-yourself (DIY). As a
result, responses tended to be quite dispersed among a wide array of retailers.
The situation is somewhat different in the discount channel and health and beauty
channel. The discount channel is not well developed in Finland, with lower-than-average
shopping frequency. However, analysts point out that the discount channel is worth
watching, as German-based Lidl moves into the Finnish market. The discounter opened
two new stores near Helsinki and announced plans to open 100 units in Finland over
the next three to four years.
Similarly, in the health and beauty channel, shopping frequency is particularly low in
Finland, with just 2 percent of respondents indicating that they shop at a health and
beauty store at least once a week, compared with the European average of 12 percent.
In addition, 86 percent of consumers in Finland could not name a favourite retailer in
the health and beauty channel.
Although consumers in Finland were generally quite clear about their retail choices in
some channels, they were not as definitive when it came to their reasons for shopping
at those stores. In most instances, retailers were not well differentiated in consumers
minds, with wide disparity among responses. For instance, a substantial number of
respondents pointed to access as their primary reason for shopping at Citymarket, yet
nearly as many identified product. And their responses regarding the secondary reason
were spread among price, product and access. Likewise, in the case of K-Supermarkets,
responses regarding the primary reason for shopping were spread nearly evenly among
price, product, experience and access, with the responses relating to the secondary reason dispersed among all five attributes.
Finnish Consumers Focus on Access and Experience
So what do Finnish consumers look for in their shopping experiences? Price appeared to
be the least important of the five attributes to consumers in Finland. The leading pricerelated factor prices do not fluctuate from day to day was ranked as extremely
important by just 33 percent of respondents. In contrast, the highest-ranking factor in
the other four attribute groups was deemed extremely important by about 60 percent
of consumers. Among the price factors, however, there was still considerably more
emphasis placed on honest prices than on lowest prices. Just 18 percent of consumers
said that getting the lowest price available was extremely important vs. one-third who
placed significant importance on honest price.
Respondents in Finland placed the greatest emphasis on factors related to access and
experience. The values-oriented factors were especially important in terms of experience,
with two-thirds of consumers citing courteous and respectful employees, 53 percent saying you are treated as a valued customer and nearly half pointing to staff responds to
concerns in a positive manner.
Compared with many of the other European countries, a lower percentage of respondents in Finland answered extremely important when asked about the 51 factors
relating to their shopping satisfaction, which might suggest that consumers in Finland
are somewhat less demanding. Nevertheless, their ranking of factors was quite consistent
with the rest of the European countries studied, with courteous and respectful employees, clean and well-maintained stores and easily visible prices leading the list.
The youngest consumers (15-24) tended to be the least demanding, with a smaller
percentage rating factors as extremely important, compared with other age groups in
Finland. Yet even among the younger shoppers, values-oriented factors such as courteous
and knowledgeable employees mattered the most. This was also true in Sweden, providing an interesting insight in how to serve young consumers in those countries.
Case Study
Prisma: Providing Value for the Money
In recent years, the retail market in
Finland has increasingly shifted toward
chains and shopping centres located
outside cities. These centres house
a variety of retailers and are often
anchored by a large supermarket that
drives customer traffic. Prisma is among
the stores that frequently plays the role
of shopping centre anchor. Prisma
belongs to the S-group and operates
more than 40 large supermarkets/hypermarkets with a market share of about 10
percent, according to retail analysts.
Prisma has built its strength on two key
features: dominating on price by offering
low, fair and consistent prices; and differentiating on product by providing a wide
selection of consistently good-quality
items. A variety of initiatives helps the
company maintain its price dominance.
S-group has restructured its procurement
and logistics procedures through
technology advances that allow for a
decentralised, more streamlined structure that requires less capital investment.
Cost efficiencies have also been realised
through greater cooperation with suppliers to help reduce the number of
touchpoints in the handling and delivery
process, particularly for produce items.
Company executives note that while
these features may not be visible to
consumers, they help Prisma maintain
its consistent pricing levels. They emphasise that rational buying is the retailers
guiding principle.
In addition, Prismas advertising and
marketing efforts are limited, helping to
further control costs. Finally, S-group
has introduced its S-Benefit Card, a
loyalty programme that allows customers
to gain bonus points by shopping at any
of the groups different stores, helping
to broaden the retailers price-dominant
value proposition.
Prismas differentiating strategy focuses
on the product attribute and is supported
by the companys reputation for carrying
good quality, reliable brands. In addition,
the retailer has broadened and diversified
its product mix to reflect consumers
changing tastes, which have become
more varied and global in nature. S-group
also works closely with suppliers, particularly in the perishables category, to
develop innovative packaging that has
allowed the company to improve both the
breadth and quality of its product offering.
13
Case Study
Company
Supermarkets
Few retail channels in Finland have undergone as great a change in recent years as
hardware/DIY stores. Due to consumer trends such as womens expanded decisionmaking role in hardware-related purchases, families as customers and the increase
in DIY shoppers, retailers in the DIY space have transformed themselves into large
one-stop-shopping stores providing a wide range of products and services for the
home. Leading the market is K-rauta, operated by Kesko/K-group. A key challenge
for K-rauta has been the need to balance the demands of its disparate customer
base, which includes construction businesses, homeowners embarked on renovation
projects, interior decorators, do-it-yourselfers and home-improvement enthusiasts.
To meet this challenge, K-rauta has opted to pursue a strategy of dominating on
service and differentiating on access. The companys service focus hinges on several
factors: offering customised solutions, advice, ideas and inspiration; obtaining and
organising installation services for customers; strong training programmes that are
tailored to the different departments and different types of customer groups to be
served; and highly skilled specialists in areas such as house construction and kitchen
and bathroom renovations.
The companys differentiation on access is critical in a channel that covers a wide
range of products and attracts diverse customer groups. K-rautas secondary emphasis on access is reflected in a number of features inside the stores that are designed
to make shopping easier:
The units are divided into two distinct sections the soft side, which contains
interior decoration items such as wallpaper, paint, ceramic tiles and floor coverings, and the hard side, consisting of construction products, hardware items,
tools and building materials.
In-store signs are clear and properly located, helping consumers find what they
need quickly and easily.
Purpose-built displays such as unrolled wallpaper shown in the correct lighting,
finished tiling exhibits and a trial bench for electric tools are designed to make it
easier for customers to locate the right products for the job.
Store settings have been designed around kitchens, bathrooms, saunas, entrance
halls, etc., so shoppers can find the products they need.
A cash-and-carry system allows customers to load goods directly from the stores
warehouse and pay in the cash-and-carry yard after loading.
In-store service locations are positioned in areas where there are products that a
customer is likely to need advice about.
Company executives note that this service/access strategic framework has helped
K-rauta achieve success in the changing hardware/DIY market.
Prisma
Citymarket
K-Supermarket
S-Market
No favourite/no answer
% saying
favourite store
20%
19%
16%
12%
15%
Discount Stores
Halpahalli
Vapaavalinta
Honkong
Tarjoustalo
No favourite/no answer
9%
6%
5%
4%
44%
Department Stores
Stockmann
Sokos
Anttila
Citymarket
Prisma
No favourite/no answer
29%
15%
14%
3%
3%
28%
Clothing/Shoes/Accessories
K-Kenk
Stockmann
Seppl
No favourite/no answer
8%
6%
4%
44%
3%
2%
86%
Speciality Stores
K-rauta
Kesport/Intersport
No favourite/no answer
7%
5%
52%
14
Case Study
Carrefour: Where Access and
Product Meet
At the junction of groceries, merchandise
and services, youll find French retail
giant Carrefour, which means crossroads in French. The worlds secondlargest retailer (behind Wal-Mart),
Carrefour operates more than 9,400
stores under some two dozen banners
in 30 countries in Europe, Latin America,
Asia and the United States (where it
owns almost 12 percent of the PetsMart
pet supply superstores). The companys
formats include Carrefour hypermarkets,
Champion supermarkets, Shopi and
March Plus convenience stores, Dia
and Ed discount stores, and Promocash
cash-and-carry stores.
The management of Carrefour understands the critical importance that values
play in business today. Beyond its
commercial operations, Carrefour puts
considerable emphasis on social and
environmental issues, including respecting the environment, guaranteeing food
safety, playing an active ethical and
social role, and fostering solidarity
around the world through education,
health and human rights. We firmly
believe that our responsible approach is
the source of our success, said Michle
Kerrad, marketing director DMMG
(Direction Marchandises et Marketing
Groupe), Carrefour.
Theres no doubt that a sharply focused
retail strategy also contributes to the
companys strength. Carrefour was
among a small number of retailers in
Europe whose value proposition was
well-defined in the minds of consumers,
with access as the primary attribute
and product as the secondary attribute.
Kerrad noted that external access in the
form of convenient location remains an
important element in the hypermarket
Northern Europe
Germany, Netherlands, UK
43%
51%
73%
Southern Europe
Total Europe
United States
57%
50%
French consumers and other Southern Europeans placed significant emphasis on handicap access in stores. This
may be due at least in part to the fact that the European population is aging considerably. The important thing for
retailers to keep in mind is that these older consumers are expected to be healthier and more fully engaged in life
than their predecessors, and, as such, represent a powerful buying group going forward.
% saying
extremely
important
% saying
extremely
important
71%
81%
69%
76%
67%
Employees are courteous and respectful
76%
64%
71%
60%
71%
% saying
extremely
important
14%
% saying
favourite store
Supermarkets
Intermarch
Leclerc
Champion
ATAC
Casino
Systme U
No favourite/no answer
18%
14%
13%
5%
4%
4%
24%
Hypermarkets
Carrefour
Auchan
Leclerc
Intermarch
Casino
No favourite/no answer
29%
21%
16%
8%
5%
12%
Discount Stores
% saying
extremely
important
19%
17%
15%
11%
Lidl
Leader Price
Ed
Aldi
No favourite/no answer
18%
10%
7%
5%
56%
Department Stores
13%
12%
10%
Company
7%
Galeries Lafayette
Printemps
C&A
No favourite/no answer
20%
10%
3%
52%
Clothing/Shoes/Accessories
5%
5%
4%
3%
3%
46%
20%
7%
59%
Speciality Stores
Dcathlon
FNAC
Castorama
Leroy Merlin
Conforama
Darty
No favourite/no answer
12%
12%
6%
5%
5%
5%
29%
The emphasis on this factor in some countries may be due at least in part
to the fact that the European population is aging considerably. For instance,
Francoscopie 2001 predicts that between 1990 and 2050, the population in
France aged 60 and older will double, those 75 and older will triple and those
aged 85 and older will quintuple.
17
of variance, with 76 percent of respondents in the Thuringen/Sachsen area rating it as extremely important, compared
with 44 percent in Baden-Wurttemberg
and 68 percent in Berlin.
The responses for offers leading brands
at lower prices also showed high variability, with 54 percent of consumers
in Berlin rating it extremely important,
while the other regions ranked it as less
important (29 percent of those in Bayern
and 33 percent in Baden-Wurttemberg,
for example).
Retail Channels and Stores:
Discounters Dominate
Company
% saying
favourite store
Supermarkets
Real
Rewe
Edeka
No favourite/no answer
7%
5%
5%
38%
Discount Stores
Aldi
Lidl
No favourite/no answer
32%
9%
44%
Department Stores
Karstadt Quelle
Kaufhof
C&A
No favourite/no answer
16%
10%
5%
53%
Clothing/Shoes/Accessories
Deichmann/Roland
Hennes & Mauritz (H&M)
C&A
No favourite/no answer
4%
3%
3%
62%
dm-drogerie markt
Mller
Schlecker
No favourite/no answer
8%
7%
7%
57%Speciality
Speciality Stores
Media Markt
No favourite/no answer
5%
64%
19
Case Study
C&A Finds its Focus
The history of German clothing and
department store retailer C&A dates back
to the 17th century. Over the years, the
company has learned how to adapt to
changing consumer trends in order to
remain relevant in the marketplace. C&A
is currently in the process of just such an
evolution as it develops an appropriate
strategy to meet the needs of todays
consumers.
The retailers redirection and strategic
focusing follow a difficult period in the
late 1990s when it watched its market
share in Germany drop. The decline was
attributed to the fact that low price alone
was no longer sufficient to maintain sales
growth due to the emergence of new
competitors. As a response, C&A introduced a variety of new tactics, including
food corners, new brand concepts in the
stores and Internet shopping. However,
by doing this the company diluted its
focus on price and lost its clear dominating characteristic, and ultimately sales
did not increase.
C&As struggles led management to
rethink the companys direction in an
effort to regain its market share. The
winners in the German market are those
companies that have a clearly focused
strategy, said Thorsten Rolfes, press
spokesman for C&A. Companies that
float in between low price and superior
quality will lose the game.
The retailer instituted an aggressive price
programme. In addition, C&A returned to
its policy of offering primarily its own
labels, allowing the company to better
control the value chain. A new advertising programme was introduced that
emphasised value for money, helping
the company reposition itself as offering
fair prices in the marketplace. C&A executives note that the company constantly
communicates its price strategy externally to its customers, as well as internally
to employees. C&As price-dominant
focus was backed up by an improved
and more efficient logistics system.
However, management recognised that
price alone was not sufficient for the long
term, as German consumers look for
retailers to offer additional attributes.
Understanding that shoppers wanted
20
% saying
extremely
important
% saying
extremely
important
71%
64%
69%
61%
67%
The retailer provides consistently good
merchandise quality
57%
64%
Employees are courteous and respectful
57%
60%
55%
% saying
extremely
important
14%
% saying
extremely
important
15%
12%
13%
12%
11%
10%
10%
You can buy from the retailer over the Internet
8%
7%
something more, C&A launched an initiative to develop access as its differentiating characteristic, at the same time working to meet industry standards on the
remaining attributes of product, service
and experience.
To achieve its goal of developing access
as its secondary attribute, C&As management has focused on several factors:
high product availability with few out-ofstocks; easy navigation and manoeuvrability inside the stores; locations that are
easy to find; accessibility to a variety of
% saying
extremely
important
% saying
extremely
important
71%
81%
69%
80%
67%
78%
64%
74%
60%
You feel that you are getting an honest price, 74%
that the price has not been artificially increased
% saying
extremely
important
% saying
extremely
important
14%
13%
28%
12%
18%
10%
14%
11%
7%
21
Fairness, to listen to the customer and create intimacy this is a key point of
differentiation and a key success factor against competitors or new entrants.
Executives at Compar Bata S.p.a., a shoe
retailer, understand the growing role that
values play in commercial transactions.
When asked about the qualities that are
important to consumers, Barbara Mariani,
city store division manager for the company, said, Fairness, to listen to the customer
and create intimacy this is a key point
of differentiation and a key success factor
against competitors or new entrants.
A number of the consumers we spoke
with in Italy pointed to factors related to
the attribute of experience. I think its
important for a company trying to create
a special relationship with a customer to
make her feel good and anticipate her
needs, said one woman. For example,
a little corner area for quick shopping
without a queue would be wonderful.
Experience is also important in the consumer products sector in Italy. Companies
such as Liabel Spa, a leader in the underwear products business, have made experience their key point of differentiation.
Our mission is to always guarantee a
good feeling and a special relationship
with our customers when they buy a
product branded as Liabel, said Alfredo
Tedesco, sales and marketing manager
for the companys Over Skin division.
22
Case Study
Divani & Divani by Natuzzi:
Driving Trends in the Furniture Market
Italian furniture retailer Divani & Divani,
operated by Gruppo Natuzzi, understands that companies must focus their
business choices and strategies on real
and individual needs of consumers if
theyre to succeed in the marketplace.
Gruppo Natuzzi with its store brand
Divani & Divani has translated that
understanding into a business model
that allows it to dominate on access
and differentiate on product and, in the
process, drive trends in the Italian retail
furniture market.
The key to Divani & Divani by Natuzzis
dominance in the area of access lies in
both external and internal features. The
company has built up a network of stores
located in areas with good external
access and high visibility where there
is plenty of customer traffic. Internally,
an open sales floor with displays that
replicate room settings makes navigation
easy and allows consumers to see how
certain pieces of furniture, such as
couches, lounges or carpets, will look
in their homes. In this way, the company
offers a solution that fits the consumers
needs, desires or lifestyle.
% saying
favourite store
Supermarkets
Coop
Esselunga
Conad
GS
No favourite/no answer
9%
7%
7%
5%
28%
Case Study
Gruppo Lombardini:
Where Tradition and Innovation Meet
Maintaining a sense of tradition while
remaining focused on the future can be
a difficult balance for many companies.
Italian retailer Gruppo Lombardini has
achieved that balance with a multichannel strategy that focuses on product and
service. The company operates nearly
500 units, consisting of hypermarkets,
supermarkets, discount stores, cashand-carry outlets and speciality stores,
with store brands that include Pellicano,
Continente, Comprabene and
GrosMarket. Gruppo Lombardini also
has a strategic partnership with
OnBanca (a financial services firm)
and Volendo.com, an innovative Internet
company.
Lombardinis product-dominant strategy
focuses on offering consistently strong
quality products, while also providing an
exclusive assortment based on local
traditions and tastes. Lombardini is
considered by many to embody the cult
of Italian food traditions. At the same
time, gourmet specialists regularly test
new assortments and products in order
to maintain the companys reputation for
innovation.
Hypermarkets
Ipercoop
Auchan
Carrefour
Iper
No favourite/no answer
14%
7%
6%
5%
43%
Discount Stores
Lidl
No favourite/no answer
4%
80%
The retailers differentiation on the service attribute centres around its staff,
which is trained to provide customers
with information and support when
choosing products. In addition, employees are quick to offer customised
services or products to meet the needs
of shoppers. Company executives point
out that it all comes down to doing the
simple things right.
Department Stores
La Rinascente
Upim
Coin
Oviesse
No favourite/no answer
8%
6%
5%
5%
62%
Clothing/Shoes/Accessories
Benetton
No favourite/no answer
3%
63%
1%
1%
76%
Speciality Stores
Media World
No favourite/no answer
2%
71%
23
24
Case Study
The Albert Heijn Experience
With about 700 shops and a market
share of roughly 28 percent of the food
and daily goods market, according to the
European Retail Handbook 2001/02,
Albert Heijn is one of the leading Dutch
retailers, so its not surprising that it
would be named as the favourite supermarket by close to one-third of the
respondents in the Netherlands. The
company believes that its success is
based in large part on a corporate
strategy that focuses first on experience
and second on product.
The Albert Heijn experience is all about
establishing a sense of closeness to consumers by providing them with answers
to their everyday question: What shall I
eat today? The company offers answers
through such unique vehicles as its
AllerHande in-store publication, which
features information about products,
lifestyles and recipes using items sold
in Albert Heijn stores. The retailer also
offers an unusual savings account as
part of its Bonus card programme.
Instead of having a discount subtracted
from their bill, customers can choose to
open a savings account. The discount
is then applied to the account, and
customers can access their cash through
the in-store kiosks.
The retailers secondary emphasis on
product is supported by large assortments, high quality, innovative products,
both low-end and high-end private
labels, a strong focus on food safety,
and a large selection of ready-made,
take-home meal solutions. To ensure
that its product offering meets the everchanging needs of consumers, Albert
Heijn conducts what it calls operation
pit-stop every three years to reset the
store and category layouts.
Finally, Albert Heijn completes its strategic framework by maintaining market
parity on the attributes of service,
access and price. In terms of access,
for instance, the stores maintain a
consistency of layout, making it easy for
shoppers to find what they need. And
on price, the company provides value
for the money, with prices that are not
the cheapest but that are in accordance
with Albert Heijns image.
25
Case Study
Company
% saying
favourite store
Supermarkets
Albert Heijn
C1000
De Boer
Konmar
Aldi
Edah
No favourite/no answer
32%
13%
9%
6%
5%
5%
4%
Discount Stores
Aldi
Lidl
Macro
No favourite/no answer
19%
3%
3%
60%
Department Stores
V&D
De Bijenkorf
No favourite/no answer
41%
16%
19%
Clothing/Shoes/Accessories
C&A
H&M
Miss Etam
No favourite/no answer
4%
3%
3%
40%
% saying
extremely
important
% saying
extremely
important
71%
68%
69%
68%
67%
68%
64%
60%
63%
% saying
extremely
important
14%
13%
12%
10%
26
7%
% saying
8%
7%
5%
4%
4%
23%
20%
11%
26%
Speciality Stores
Gamma
Praxis
Dixons
Bruna
Free Record Shop
No favourite/no answer
5%
4%
2%
2%
2%
47%
When Norwegian consumers were asked to name the primary and secondary reasons
they shopped at their favourite retailers, the answers were widely dispersed among the
five attributes of price, product, service, access and experience. While this also was true
to some degree or another in most of the European countries studied, it seemed to be
particularly acute in Norway. This was the case even among discount stores, which in
some of the other European countries tended to be more clearly differentiated first on
price and second on either access or product.
In addition, within most of the channels in Norway, there were no clear favourite retailers, with responses scattered among a large number of stores. This is not surprising,
given that in many channels, there are numerous store banners represented. However,
the overall retail market in Norway is, in fact, quite highly concentrated among a
handful of parent companies. This is particularly true in the supermarket and discount
store channels, where four large players control nearly 100 percent of the market:
Norgesgruppen, Hakon Gruppen, Coop Norge (Coop Norge is in the process of merging
with its sister organisations in Sweden and Denmark to form Coop Norden) and Reitan
Handel. Much of the concentration has resulted from a string of mergers and acquisitions
over the past three to five years. With little room left to grow inside Norway, many retailers are beginning to expand their view beyond Norway toward a more Nordic
perspective or an even broader European view.
The challenge for multibanner operators comes in identifying the appropriate
competitive positioning for each of the retail brands. Take, for example, the case of
Norgesgruppen. Norgesgruppen covers food retail chains and brands like Meny, Ultra,
Spar and Kiwi, said Runar Hollevik, marketing director. The market strategy and
the ownership of the chains is very different. Therefore, the Consumer Relevancy
methodology naturally must be used differently for each brand.
Of course, there were a few examples of retailers, such as Rema 1000, IKEA and Body
Shop, that did have a clear differentiation in the minds of Norwegian consumers. For
instance, the bulk of consumers identified price as their primary reason for shopping
at Rema 1000 and access as the secondary reason.
27
Consumers Focus on
Service and Experience
28
% saying
extremely
important
% saying
extremely
important
71%
69%
69%
67%
66%
64%
64%
60%
% saying
extremely
important
14%
13%
12%
10%
7%
% saying
extremely
important
6%
4%
3%
3%
3%
Case Study
Work in Progress: Coop Norge
Assesses its Relevancy Positioning
As a multiformat retailer, Coop Norge is
faced with the challenge of finding the
appropriate consumer-centric strategy
for each of its chains, consisting of Coop
Prix, Coop Mega, Coop Obs! and Coop
Marked. However, before the correct
strategic framework can be determined,
the company first needed to assess the
current positioning of its chains based on
the Consumer Relevancy model of dominating on one of the five attributes, differentiating on a second and meeting
industry par on the remaining three.
In that assessment (see accompanying
chart), Jon Eskedal, chain director for
Coop Norge, and his team considered
how each of the companys four chains
measured up in the areas of access,
experience, price, product and service.
Heres what they found:
Coop Prix, the discount store chain,
rated a 4 (differentiation) on the
attributes of price and service, and a
3 (meeting industry par) on access,
experience and product, but did not
rate a 5 (domination) on any of the
five attributes.
Supermarket chain Coop Mega
achieved a score of 5 on experience,
but a 4 on both product and service,
and a 3 on access and price.
Coop Obs!, the companys hypermarket
chain, was rated a 4 on experience,
price and product, and a 3 on access
and service.
Coop Marked, a chain of smaller neighbourhood grocery stores, achieved a
4 on service, but a 3 on the remaining four attributes.
Company
% saying
favourite store
Supermarkets
Rema 1000
Coop Mega
Meny
Coop
ICA
Rimi
Ultra
Coop Obs!
No favourite/no answer
12%
6%
6%
5%
4%
4%
4%
4%
34%
Discount Stores
Rimi
Rema 1000
Europris
Coop Prix
Kiwi
Nille
No favourite/no answer
12%
12%
4%
3%
3%
3%
52%
Department Stores
IKEA
Steen & Strm
Coop Obs!
No favourite/no answer
4%
4%
3%
48%
Clothing/Shoes/Accessories
Hennes & Mauritz (H&M)
Dressmann
No favourite/no answer
6%
4%
51%
3%
3%
82%
Speciality Stores
Intersport
Elkjp
G Sport
Tanum
No favourite/no answer
2%
2%
2%
2%
57%
5
4
3
2
1
0
Coop Prix
Coop Mega
Coop Obs!
Coop Marked
(discount store)
(supermarket)
(hypermarket)
(neighbourhood store)
Access
Experience
Price
Product
Service
29
tries. A recent study shows that 60 percent of Spaniards do not save money, and
out of this 60 percent, one-third barely
make it to the end of the month, he said.
If there is an extra expense during the
month, the budget is so tight that credit
cards are used and people just hope for
the best. This fact is one of the main
reasons that explains the success of priceoriented strategies in our country, like
Dia and Mercadona.
30
Case Study
Aldeasa: Access
is the Pillar of
our Business
With 127 airport shops in Spain and
42 around the world, Spanish retailer
Aldeasa understands the importance of
access. Access is the pillar of our business, said Eugenio Andrades, strategy
and planning director for the company,
which also operates shops at museums,
monuments and other tourist venues.
We have a captive client who is attracted to our stores because they are about
to travel, therefore we have to be present
in his walking route. In our case, the
location, location, location precept is
still fundamental. Being in one or another
point in the airport is the difference
between selling and not selling.
However, Aldeasa is also focused on
the internal makeup of its stores.
Convenience is a key aspect, particularly
for its Spanish clientele, who tend to be
business travellers and tourists. To better
define its product assortment inside its
stores, the company has introduced
space management techniques that are
new to its retail sector. Aldeasa has also
established a system of unified merchandising criteria in its stores.
The companys secondary focus on
price is geared in large part to its foreign
tourist clientele, especially English and
Germans, who tend to be price-oriented
shoppers. It is erroneous to believe that
the tax-free savings offered to our clients
is our only competitive advantage, said
Andrades, who noted that legislation has
largely abolished that advantage. The
company operates with a centralised
pricing system, working directly with
% saying
extremely
important
% saying
extremely
important
71%
84%
69%
79%
67%
79%
64%
77%
60%
Prices do not fluctuate from day to day
75%
% saying
extremely
important
% saying
extremely
important
14%
13%
12%
19%
10%
10%
26%
8%
7%
31
% saying
favourite store
Supermarkets
Mercadona
Dia
Carrefour
Caprabo
El Arbol
Eroski
No favourite/no answer
14%
5%
3%
3%
3%
3%
41%
Hypermarkets
Carrefour
Hipercor
Alcampo
Eroski
Mercadona
No favourite/no answer
22%
9%
6%
5%
4%
40%
Discount Stores
Dia
Lidl
No favourite/no answer
13%
2%
77%
Department Stores
El Corte Ingls
Carrefour
No favourite/no answer
39%
1%
52%
Clothing/Shoes/Accessories
Zara
El Corte Ingls
No favourite/no answer
9%
4%
61%
2%
1%
1%
1%
1%
1%
69%
Speciality Stores
Dcathlon
FNAC
No favourite/no answer
2%
2%
71%
Executives from leading retail and consumer products companies in Spain offer their thoughts on the underlying trends related to Consumer Relevancy, the importance of values and the changing business climate.
On consumer trends
Albert Bricall Orellana, corporate commercial director, Nestl Espaa, S.A.: Consumers have a
higher education level and a more critical attitude, facts that make them more sensitive to the qualityprice relationship Consumers value their scarce time more than ever before (time poor). They require
more information on products, but ironically they do not have enough time to read it, which is another
advantage for strong and recognised brands.
Jos Luis Prez, national accounts manager, Nutrexpa: Spanish consumers are becoming as
demanding as European or U.S. consumers in terms of purchasing. Sensitivity to food quality has
increased rapidly in the last three to four years. Consumers have become more conscious of what they
are buying. They are still less demanding, however, in terms of service or when looking at post-purchase
complaints.
Paloma Elegido, CEO, General Mills Ibrica: Consumers look for value for money, that is, a good
price/quality ratio. Additionally, they want time convenient products. They are also interested in fun
foods and cooking and healthiness.
Augusto Arquer, trade marketing manager, Kimberly-Clark: There is a high level of loyalty toward
stores where consumers have the perception that they are going to save time. Consumers receive 1,000
messages weekly (radio, TV, magazines, etc.), a fact that creates a lot of confusion. To ease the purchasing process is fundamental nowadays.
Carlos Prez, CEO, Enaco: Currently, we are facing a contradictory consumer, with a higher income
level, but, on the other hand, more price sensitive. We think this is due to the evolution of certain retail
formulas whose positioning has evolved towards price, and they have succeeded in educating the consumer. Consequently, traditional barriers between formats associated with clients income level tend to
disappear.
Jos Luis Lomas, commercial director, Grupo Panrico: Consumer segmentation is a practice that we
rarely use. Our products are mass-market oriented, very generalist. We would rather put an emphasis on
channel segmentation because we think that the consumer changes skin and we want to be sure to be
there whenever they decide to change. Fine-tuned segmentations, micro-marketing, etc., appear to me
to be dangerous exercises that may even limit the coverage our brands currently possess.
On values and the context surrounding business transactions
Ricardo Currs, commercial director, Dia: More and more, I believe that values are essential, with
honesty the most important one. At Dia, we respond to this trend by being the Spanish reference in terms
of price. But we are conscious that price for price is not enough. We want to offer the best quality/price
ratio in the market, with our own brand and national leader brands too.
Miguel Angel Granda, director, E. Leclerc Spain: A system we use to generate context is through the
adaptation of each hypermarket to its local environment, a fact that we enhance by placing significant
amounts of local products in the assortment. We also provide sponsorships to local sports teams, community meetings in our facilities, etc. in other words, our adaptation to the local way of life.
Manuel Alcolea, CEO, Kraft Foods Espaa, S.A., and president of ECR Espaa: We try to transfer to
the consumer the values of our brands (Saimaza coffee: emotional encounters; El Casero cheese: kids
nutrition). All of our strategy (new products included) is based on our consumers necessities, focusing
on relevant and emotional issues.
Miguel Calatayud, CEO, Noroto, S.A.: Consumers are giving more and more importance to values.
In a business like ours (car maintenance and spare parts selling), security is essential and is the main
attribute we try to transmit.
Jordi Mir, sales director, Danone, S.A.: I believe that in this matter the pendulum theory applies:
Throughout the years, Western culture has moved us away from the basic life values, but now we are all
heading back to them. The September 11, 2001 events probably reinforced this back-to-values feeling
worldwide. Those companies that reinforce the belief in human values will be the winners of tomorrow,
as long as they also maintain a basic offering that performs well.
Miguel Angel Lopera, fabric and home care products, Iberia director, Procter & Gamble: We are
convinced that delivering context is essential in formulating any commercial strategy. Today, there are
clear differences between products that can be identified technically or directly by the consumers.
However, the gap is not so huge as some years ago, which is the reason why context has become more
and more important for brands.
On the changing business climate
Marcos de Quinto, president, Coca-Cola Espaa: It is being demonstrated that all formulas have their
own place in the marketplace. But the evolution is tremendous and continues to increase, and it is
becoming harder to draw border lines. Probably in a short time, Mercadona, for example, will consider
McDonalds as a competitor in the meal solutions segment.
Fernando Valds, CEO, Lever Faberg (Unilever Group): Spain has a proven market know-how in
terms of strategic definition, and the textile industry is a good example of it. Zara, Camper, Coronel
Tapiocca, Massimo Dutti, Cortefiel they have effectively blocked the entrance of the main world players
into the Spanish textile industry. They have done well and their value propositions have gone beyond our
frontiers and have been imitated all over Europe. Unfortunately, food retailing is an industry that has been
left behind in this race.
32
A few variances related to shopping frequency by channel emerged from the research.
For instance, more than two-thirds of Swedish consumers said they shopped at a supermarket more than once a week, significantly higher than the European total of 42 percent
for the supermarket channel overall. Analysts believe this is due to the fact that there are
very few remaining butchers, bakeries or other small food stores in Sweden, causing
consumers to shop at supermarkets more often.
The reverse was true in the health and beauty channel, where shopping frequency was
lower in Sweden, with almost three-quarters of consumers saying they shopped in this
33
channel less than once a month vs. the European total of 43 percent. This is likely due
to the fact that most health and beauty formats are relatively new to Sweden. Consumers
are more likely to buy their health and beauty products in supermarkets and department
stores. The channel may heat up, however, with the entrance of Aholds Dutch health
and beauty care chain Etos, which opened its first two stores in Stockholm in February.
In many retail channels in Sweden, there were no dominant favourite stores. An exception was the department store channel, where hlns was named as the preferred retailer
by 14 percent of consumers. And in the supermarket channel, 29 percent of respondents
named ICA as their favourite retailer. ICA, which is 50 percent owned by Ahold, was also
named by 5 percent of respondents as their favourite discount store and even received
2 percent of the mentions in the department store channel. Consumers strong preference
for ICA is not surprising, given that the retailer dominates the food and daily goods sector, with close to 2,000 units and a market share of more than 35 percent, according to
the European Retail Handbook 2001/02.
As a leading retailer in Sweden, ICA/Ahold recognises that its responsibility extends to
areas such as social issues. When asked to identify the next big issue in the Swedish retail
business, Kerstin Lindvall, who is responsible for environmental issues at ICA/Ahold,
noted in a recent issue of Swedish newspaper Dagens Handel, It will be about social
responsibility ... It can be about how we purchase from the third world or how we handle matters related to child labour. In short, social responsibility. ICA cooperates with the
Red Cross who have helped tham set a policy on how to handle purchases from the third
world. Other important issues are fair salaries, discrimination, handling of chemicals
and concerns about the rain forests, said Lindvall.
The online channel stood out in Sweden, with 27 percent of respondents indicating
that they had shopped over the Internet, the highest percentage in the nine European
countries. The overall average for Europe was just 17 percent. Some analysts note that
Swedens higher rate of Internet shopping may be due to its relative remoteness and
high-tech orientation. They point out that technology is generally viewed in a positive
light in the country thats home to tech leaders such as Ericsson.
Case Study
Statoil Detaljhandel: Making Everyday Life Easier for Customers
Statoil Detaljhandel Skandinavia, which runs 1,500 gas and convenience store outlets
in Sweden, Norway and Denmark, operates in a business with shrinking margins
and tough competition from convenience stores, fast-food outlets and supermarkets.
Maintaining growth and standing out from the crowd require strong positioning.
The strategy that Statoil has chosen focuses first on access and second on service.
Our mission is to make the lives of our consumers easier and less stressful, said
Mats Holgerson, president of Statoil Detaljhandel Skandinavia, which is a 50/50 joint
venture with Swedens ICA supermarket chain.
Statoil has focused on both external and internal access. External access in the form
of numerous outlets that are strategically and conveniently located, along with convenient parking and long opening hours, remains important in the convenience store
channel. From an internal perspective, the layout of the shops is critical in achieving
the goal of easy access. The company offers what it calls Quick Stop and One
Stop. The former means that shopping should go quickly, while One Stop means
that all the most commonly required products should be available, said Holgerson.
Statoil differentiates on the attribute of service, a key area considering that the majority of its employees work in customer-facing positions. The focus on service has been
a major part of Statoils programme to strengthen its competitive positioning. The
company offers a full line of services, including petrol, car wash, car services, carrelated products, car rental, fast food and home entertainment. There are other opportunities to expand its focus on service by extending its petrol stations as pickup
locations for products from postal order companies, dry cleaners, theatre tickets, etc.,
as well as adding banking and postal services.
Company executives also understand that Statoil must meet the market standard on
the three remaining attributes. The range of products is broad but shallow, in keeping
with the norm in the convenience store channel. Company executives note that the
combination of low investment costs and relatively high profitability enables Statoil
to maintain a fair price level. And in terms of experience, Statoil aims for a friendly,
personal environment rather than fancy interior dcor.
34
Case Study
Company
% saying
favourite store
Supermarkets
ICA
Konsum
Hemkp
No favourite/no answer
29%
11%
4%
22%
Discount Stores
Willys
Rimi
ICA
No favourite/no answer
6%
5%
5%
5%
Department Stores
hlns
NK/Nordiska Kompaniet
Obs
Coop/Coop Forum
IKEA
Maxi
ICA
No favourite/no answer
14%
5%
4%
4%
2%
2%
2%
50%
Clothing/Shoes/Accessories
The company meets the market standards on the remaining attributes. In the area of
service, however, H&M is considered to have a strong return policy, a key issue with
many Swedish consumers, based on our research.
7%
5%
4%
44%
% saying
extremely
important
% saying
extremely
important
71%
67%
69%
66%
67%
64%
64%
64%
60%
63%
% saying
extremely
important
% saying
extremely
important
14%
7%
13%
6%
12%
4%
10%
4%
4%
4%
2%
2%
80%
Speciality Stores
Akademibokhandel
Bokia
Clas Ohlson
Stadium
No favourite/no answer
3%
2%
2%
2%
55%
7%
35
36
strated stronger preferences than did shoppers in many of the other countries, with
11 percent of respondents naming Next as
their favourite clothing store. In most of
the other European countries, there was
no discernible leader in this channel.
In contrast, the discount channel was
quite weak in the UK, with low usage
and no strong store preferences. In fact,
70 percent of UK respondents could not
name a favourite discount store. This may
point to an opportunity for a strong discount operator to enter the market and
target price-sensitive consumers.
While chains such as Tesco, Sainsbury,
Debenhams and Marks & Spencer exhibit
strength across all of the United Kingdom,
other retailers display strength in specific
regions. For instance, among supermarkets, Morrisons received a significant
number of favourite store mentions in
the Yorkshire, Tyne Tees and Lancashire
regions. Store preference responses for
Waitrose were strongest in London and in
the southern region of the country. And
among department stores, John Lewis was
strongest in London and Anglia. Even in
the case of a strong national chain such as
When they [a mail-order retailer] didnt deliver, they compounded the insult by displaying the most pathetic customer service, which demonstrated a lack of integrity
and honesty on the part of their staff. Needless to say, we will never use them again!
% saying
favourite store
Supermarkets
Tesco
Sainsbury
Asda
Safeway
Morrisons
No favourite/no answer
29%
20%
17%
10%
8%
5%
Discount Stores
Matalan
Aldi
Lidl
TK Maxx
No favourite/no answer
5%
2%
2%
2%
70%
Department Stores
Debenhams
Marks & Spencer
John Lewis
No favourite/no answer
20%
16%
9%
32%
Clothing/Shoes/Accessories
Next
Marks & Spencer
Clarks
No favourite/no answer
11%
5%
4%
36%
36%
8%
5%
42%
Speciality Stores
Waterstones
B&Q
WH Smith
No favourite/no answer
6%
6%
4%
43%
37
Case Study
Marks & Spencer:
Finding its Footing in Food
Over the past five years Marks & Spencer
has had more than its share of press
coverage. Unfortunately, not all of it has
been good. From being seen as the rocksolid bastion of UK retailing and prospering as never before (in March 1998, the
company announced profits before tax of
1.2 billion), Marks & Spencer has gone
through an intense period of public and
internal scrutiny, as sales and profits
plummeted, customers left in droves, and
the retailer endured a very public board
battle over the leadership of the company.
Since then, however, Marks & Spencer
has undergone significant change and
restructuring. The makeup of the board
has changed entirely, an outside CEO
(Luc Vandevelde) was appointed and the
company has begun to recapture some
of its former glory and sales.
Despite the turmoil, Marks & Spencer
has managed to remain well positioned
in consumers minds. In our research,
the company stood out as having a clear
primary positioning in the area of product
and a secondary positioning in service.
The company may owe this, at least in
part, to its food operation. Through the
past five years, Marks & Spencers food
business has continued to post modest
positive growth (roughly 5 percent each
year). So how has the company managed
to maintain growth in its food business
given the changes going on around it?
The answer clearly lies in the overall
premise of Consumer Relevancy, which
says that companies that try to be good
at everything are either doomed to fail
or leave significant money on the table.
Instead, companies should establish
a focused, relevant and differentiating
value proposition and then execute
against that strategy. It is in this area that
Marks & Spencer foods has excelled.
Over the past 10 years, the food industry
in the UK has gone through a process of
polarisation, with the growth of massproduced, industrialised, cheap food on
one end of the market and a small but
growing demand for organic and locally
produced food on the other. The UK is
often viewed internationally as being the
benchmark in certain aspects of food
production and distribution, especially
in technically challenging areas such as
chilled foods.
Yet UK residents frequently express a
fundamental level of dissatisfaction
about food. They worry about food
safety, from genetically modified foods
to BSE; they are concerned about the
ethics regarding the manner in which
food is produced; and are distrustful of
supermarkets and the prices they pay
for their groceries. Finally, there is a clear
trend emerging relating to their own
health and well-being and the role that
foods and supermarkets play in that.
38
works as part of a team with food product developers and technologists. This
is due to the fact that many M&S food
products are complex to produce (with
as many as 40 ingredients), technically
difficult to master (chilled precooked
food) and revolutionary in nature (steam
cuisine). Marks & Spencer retains control
over all of its raw materials a key driver
of consistent, high-quality food. The
companys prime objective is to produce
a product of outstanding quality that will
excite and tantalise consumers.
Due to its 100 percent own-label policy,
Marks & Spencer embraces the entire
food chain and is more involved with
suppliers than is typical of more traditional retailers. Suppliers know from the
outset that product quality and product
safety are of greater importance than
volume through the factory. Marks &
Spencer would rather offer a limited
range of products in its stores and risk
customer disappointment on that issue
than risk selling poor-quality products.
The objective of these efforts is to build
trust among consumers trust that they
will get a consistent product, one that
inspires them, that is offered at a fair
price, and that will contribute to their
lifestyles and aspirations.
% saying
extremely
important
71%
69%
67%
64%
60%
UK Top 5 Responses
% saying
extremely
important
71%
68%
66%
66%
62%
% saying
extremely
important
14%
13%
UK Bottom 5 Responses
% saying
extremely
important
15%
10%
12%
10%
10%
10%
7%
9%
Endnote:
How to Become
Relevant to Consumers
The following CPRD research and thought leadership reports are available for
downloading through our website (click on industries at www.cgey.com):
Searching for the Global Consumer: A European Study of Changing Lifestyles and
Shopping Behaviour
Point of View Consumer Relevancy: Changing the Rules for Corporate Success
Point of View Customer-Driven Transformation: Operationalising Consumer
Relevancy
Point of View State of the Art in Food: The Changing Face of the Worldwide
Food Industry
2001 Consumer Goods Technology Trends Research Report
Third-Party Logistics Study: Results and Findings of the 2001 Sixth Annual Study
The Shopper Report: 2001 Consumer Relevancy Awards
Excerpts from The Myth of Excellence, the best-selling book that focuses on our
Consumer Relevancy methodology
Coming soon
Point of View Consumer Relevancy in the CPG Business: Leveraging Context to Build
Brands (May 2002)
2002 Shopper Awards: How Consumers Rate Retailers (May 2002)
Retail Technology Report 2002: Aligning IT with Strategic Objectives (June 2002)
www.cgey.com
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